Is this the future of investing?

The world of personal investing is complex, with a myriad of options that help us all make our money work for us.


The world of personal investing is complex, with a myriad of options that help us all make our money work for us. But many people are put off investing due to its complexity.

Now, help is at hand. We can all take full advantage of a new wave of investment, thanks to technology – in the form of robo-investing.

While brokers have utilised robo-investing since the early 2000s, it wasn’t until 2008 that the first robo-investment services were offered directly to clients via a US company called Betterment. And now, the technology is becoming widely available.

A robo-investor is an automated style of online financial advisor which employs cutting edge software to help you manage both your money and investments. Before you conjure-up images of an actual android in a business suit, there are other terms for robo-investors, such as Digital Investment Management and Automated Investment Advice.

In other words, technology has come to the aid of traditional human investment advisors – and investors. Given the speed at which technology operates, investment decisions can potentially be made much faster, drawing on historical data and predictions with great accuracy.

Just as if you were working with a traditional financial advisor, robo-advisors help decide how and when it is best to invest.

The first step in the robo-investment journey is a series of questions to ascertain the financial goals you hope to achieve and your risk appetite, which is usually low, medium or high in investment terms.

Once the robo-advisor has gained a detailed insight into your requirements, it uses advanced technology to allocate your funds to the most suitable investments.

Then your investments will be managed over time by the intelligent robo-advisor software, which can dynamically adjust allocations as financial goals or needs evolve, and market conditions change.

Can we trust these futuristic investment advisors? Bluntly, I think yes. Like most technology-based innovations, they come from human ingenuity, human knowledge and human programming.

And remember that most nations’ legislation lays down a duty of care on investment advisors to avoid misleading clients by acting in good faith, disclosing all the facts and employing reasonable care.

Companies such as Sarwa right here in the UAE offer robo-advisor led investments, backed by a team of professionals with deep industry experience. But utilising technology to the fullest means some investment services which were previously only available to the ultra-rich are now accessible to all.

A robo-advisor also negates the need for face-to-face meetings and reduces costs on both sides of the investment arena. In our super-busy world, shortcuts to wealth are welcome.

So, what should you look for in a robo-advisor?

Easy account setup is a given. To smooth the beginning of your investment journey, you should expect basic details to be taken, like your identity and banking information and a detailed questionnaire regarding your investment aims. There should be an element of education via the website or app to enable you to better understand the terminology, investment process and outcomes.

Security features, of course, should be paramount, so make sure to check that the company you choose is registered, regulated and transparent in its fees, policies and services.

Note that robo-advisors are best used for straightforward investing. Where there might be complex investing issues, such as estate planning, robo-investment is not advised.

As the availability of automated investment services rises, so will the number of people taking advantage of these increasingly low-cost solutions.

According to information garnered by business data platform, Statista, assets under management in this emerging segment are projected to reach US$1,427,650m this year (2021).

Statista further expects an annual growth rate (CAGR 2021-2025) of 18.78% – which will result in a projected total amount in assets under management of some US$2,842,101m by 2025.

And the number of people taking advantage of robo-advisors by 2025 is predicted to be 478,886 million. Of those users, the Statista data suggests average assets under management per user is expected to be US$4,875 in 2021.

Trusting in robo-advisors is set to become more common, but, as with all investment, whether or not technology is truly advantageous in the investment sector remains to be seen as we ride out the post-pandemic economic issues.

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